Manufacturing, 3D Printing and What China Knows About the Emerging American Century

The factory of the future. One man, and a dog, run the whole thing; the dog to keep the man from touching the automated controls. (If you say “one woman” you don’t need the dog, since males are notoriously ADHD and prone to tinkering.)

The factory of the future is a fully-automated building filled with robotic systems and software. Purified raw materials and power go in, and a massive stream of customized products comes out. It is an incredibly efficient machine with nary an ounce of waste. Software enables fabrication with the precise type and amount of materials, while more software and communications ensure that what is produced is precisely what is demanded from the end market.

That is the goal, and always has been. And it is barely an exaggeration of what is already emerging -- except for the dog. The poster child of the factory-of-the-future is visible in a hot new trend in the techno-dweeb sphere, so-called 3D Printing. These machines literally ‘print’ from computer images entire finished parts or simple products, ‘assembling’ from raw metal powders using powerful lasers or electron beams. They work much the same way much your computer’s laser printer does, though in the latter case using much less powerful lasers to print text using powdered inks. One guy, a computer, and a 3D ‘printer’ … presto a desktop factory. More on this incredible technology in a minute.

Such manufacturing is being enabled by the long march of technology. And it surely worries China. While economic historians remind us of the importance of the twin innovations of free markets and financial structures, both those factors pale against the power of technology to create productivity, and thus the wealth of the world.

If the future factory is a machine born of emerging technologies and requires de minimus labor, on average such factories will be located preferentially where the skills and culture exist to invent and implement. And, on average, you’d put such factories close to demand. The U.S. still has more of both innovation and GDP than any other nation in the world, and will for some time. (The “on average” necessarily assumes roughly equal tax and regulatory treatment, and roughly equal cost of capital.)

That technology adds productivity – more output using fewer labor hours – is an old story. But this means, in a narrow sense, technology eliminates jobs even as it creates broader societal wealth. We’ve seen this in America where total manufacturing output has doubled in the last thirty years while the manufacturing labor force dropped from 17 million in the mid ‘70s to 12 million today. Each worker today is thus six times more productive. Overall this is a very good thing for America, but not so good on the face of it for the five million no longer directly employed in manufacturing.